Oracle licensing revenue up slightly is not a need to panic

So, I’ve waited until the reporters, stories, rumors and commentary has died down somewhat before weighing in on Oracle (ORCL, Fortune 500) third quarter earnings.  OK, so the numbers didn’t quite meet projected growth.  Did people really expect that to happen with today’s environment and Oracle aggressive acquisition strategy?

The theory that companies will stop buying applications or “squeeze more” out of their current applications to save money is just not realistic. A company can stop buying new Oracle licenses, but it doesn’t stop working on its business – which means moving forward, making changes, etc. Changes to any business very likely means changes to applications and the need for different licensing. Remember, one of the golden rules for Oracle licensing is make certain you have the right amount of licensing because over-licensing or under-licensing can also lead to money not well spent.

New software license revenue was up 16% from a year ago (though projected growth was 15 percent to 25 percent). Many say that Oracle license growth indicates whether Oracle is growing wallet share among CIOs. With this quarter’s license revenue at the lower spectrum of the company target, investors are panicking. But, here at Miro, we’ve been seeing more licensing purchases (and smarter decisions on Oracle licensing). We still have one quarter to go. And, let’s not forget about Oracle’s maintenance fees (there’s still growth in that area).

Among the key figures for 3rd quarter earnings:

Total Oracle software revenue was $4.24 billion in the third quarter.

On demand sales were $174 million, up from $167 million in the previous quarter.

Services revenue was $1.1 billion in the third quarter, down slightly from the second quarter.

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